ON SAVINGS: Don’t Rob Your Future Self

Dont Rob
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If you and your spouse want to reach your financial goals, you’ll get the best results by working as a team. That means finding ways to save money together so you’ll have more cash that you can set aside for your future.

Nearly all marriages come with financial challenges. Big or small, money issues are going to come up and it can be stressful. An emergency fund helps you avoid plunging deep into debt over unforeseen circumstances, like job loss or a prolonged illness, or temporary setbacks, like a major car or home repair. The way you spend money directly affects your spouse’s financial well-being and vice versa, so it’s important to create a financial plan to share expenses and still save money.

According to the Consumer Expectations Survey (CES) Report of the Bangko Sentral ng Pilipinas (BSP), more Filipino households reportedly have savings. From April to June 2015, those with declared savings reached an all-time high of 33.9 percent across all income groups. Emergencies, education, and health are among the top 5 reasons cited for the increased savings pool. Meanwhile, those who could regularly save 10 percent of their income remained somewhat fixed at 36.5 percent.

Strike a balance in looking after your present well-being and taking care of your family’s future, here are some simple ideas on how you as a couple can work together to save money:

 

  1. Set financial goals together

It’s hard to save money if you and your partner don’t have the same priorities when it comes to finances. That is why you need to discuss your goals so you can decide together where you want to allocate your funds. Fix a time frame for each goal, and plan accordingly to know how much money you need to save.

 

As Warren Buffett quoted “Do not SAVE what is left after spending, SPEND what is left after saving.” Make savings your priority.  Create a long-term plan for your financial targets and split them into bite-size monthly savings plan that you can prioritize and work together.  Impractical savings plans will only end as a plan if it is impossible to start with.

 

  1. Create a budget plan and stay within the budget

Maintain a record of your daily expenses and keep track of it for over a month or two, now that you know your spending habits, you can make adjustments on your spending. This strategy will help you to come up with a cost saving plan. By cutting off unnecessary expenses, you are creating a spending plan that makes saving a priority.

 

  1. Stay clear of debts

Avoid falling in a debt trap, and if you’re already in it, make sure your topmost priority is to repay the debt. Kung may credit card kayo, iwasang gamitin ito. There is a neurological research that has proven that when we swipe debit and credit cards, we literally shut our brains down and we don’t process what’s happening. Using cash can help keep your spending under control and increase your money mindfulness.

 

  1. Practice positive spending habits

One major issue in marriage is spending money on things the other spouse does not agree with. We recommend having a spending limit. It can be any amount that you both agree on as a couple. For any purchase over a specific amount, try to discuss it first before making a purchase.

 

Be transparent on all your spending, including your financial support you send to your families back home.  Obtain the approval of your spouse and vice versa for any family support.  This way, your families will respect both of you, as you respect each other’s right-to-know where the money goes.

 

  1. Use the “Envelope System” budgeting

With the envelope system you use cash for different categories of your budget, and you keep that cash tucked away in envelopes. You can see exactly how much money you have left in a budget category just by taking a quick peek in your envelope. Huwag dayain ang sarili, don’t shuffle cash from one category to fund another. Remember, the whole purpose of the envelope system is to control your spending and help you stick to your budget.

 

  1. Cut down on your monthly bills

One of the best ways to save on extra cash is to cut down on your monthly expenses. Even though some of our regular bills might seem small and insignificant on their own, their cumulative effect can be enormous. Unplug all unused electrical devices, turn off your lights, electronics, and appliances when you aren’t using them. These are just some of the many ways you can lower down your monthly expenses.

 

  1. Create a joint account

A joint account can make finance handling easier and also fortifies trust in a relationship. You can make the most of your money by consolidating expenses. Talk about it and make certain that both of you are comfortable with this option.

 

  1. Plan ahead for retirement

If you want to continue your lifestyle the way it is now, you’re going to have to consider how to pay for it when you retire. A pension plan serves as a medium to fiscal stability after retirement. The earlier you start the better, after all, lahat naman tayo ay tatanda.

 

  1. Start saving 15% of your gross income

A savings goal starting with 15% of your combined monthly income would go a long way. Even if you are committed to saving money, you may find yourself falling into the trap of spending an extra 100 Dirhams here or there, thinking, “Ngayon lang naman..” but this could be a huge mistake. One of the cornerstones of saving money is understanding the time value of money – 1 Dirham today is more valuable than 1 Dirham a year from now. Do not look down on the day of small beginnings. No matter how small your savings account is now, with wise stewardship and disciplined cost-cutting, you can someday be living the life you’ve always dreamed of.

 

  1. Keep learning together

Communicating and constantly adding to your financial knowledge as a couple goes a long way. If you don’t know anything about finances or investing, recognize that you need to increase your financial literacy. Ask for help from a professional, start reading up on personal finance books, and look into educational courses on money and investments that you can take together.

 

Disrupting what-used-to-be can cause friction between spouses.  Take an honest stance, disclose all your commitments, debts, obligations and bad spending habits. Ask your spouse to support you, talk about your savings plans, and focus your energies into positive planning towards financial freedom.

The seed of time and knowledge you saw today can mean bigger savings in your bank account and more funds placed into smart investments. But moreover, it can equate to peace of mind and the satisfaction that comes with financial security.

 

Financial literacy is about your basic understanding and having the right mindset towards money-related decisions as well as the products and services of financial institutions and how you can optimize their benefits. PBS is keen to see you and more Filipino couples know how to manage personal finances — including savings, budgeting, making investments, business ventures and retirement planning to become a ‘Financially Smarter Couple’! We are inviting you and your spouse in our Financially Smarter Couple A Special Financial Mastery Session for Couples. This special session presents a comprehensive overview of financial knowledge, with best practices and tips for individuals on how to save, budget, invest, and borrow funds effectively. Being financially educated is the first important step towards becoming financially independent and secure. So start your journey with us today!

 

Follow us again next week in this 4-part series on financial mastery for couples. We appreciate your comments on this article, visit our website at http://phbusinessschool.com/newsletter. Connect with our office at Ibis One Central Building with telephone nos: +971 45232488. You can also find us on Facebook, Instagram and LinkedIn. For more information visit our website at www.PhBusinessSchool.com

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